words Al Woods
HGTV can be a wildly addicting gateway into the world of real estate and home improvement. You sit down to watch one episode of some house-flipping program and suddenly you’re looking around your own house for projects, or scrolling through local listings, thinking about how you’d change the layout or design of the houses on the market to make them more desirable.
You might think that making a career out of flipping houses is unrealistic, but the truth is that it can be extremely lucrative if you do the proper research to be successful.
Finances
Arguably the most difficult part of breaking into the business of home flipping can be funding. Likely, you don’t have a couple hundred thousand dollars sitting around to drop on purchasing properties, so your first step is to get a loan to start your business. It’s important to do your research on the variety of loan types available since each kind of loan will have its pros and cons and will have different approval rates and flexibility. FHA loans are a great option if you’re new to the real estate and home improvement business since they’re easier to receive approval for than most other loans. FHA loans don’t require applicants to have an above-average credit score, only asking that they have a minimum score of 580 or higher. What’s more important than an exceptional credit score is your actual credit history. FHA lenders will look at all of your loan histories to determine whether or not you’ll reliably pay them back. FHA loans also don’t have an absurdly high-interest rate like some other loans, and only ask that you provide a downpayment of 3.5%-10%, which is fairly average for a downpayment on a home.
Selecting the Right Property
Once you know what kind of budget you’re working with, it’s time to find the perfect property to start your home-flipping business. You want to look for a house that will give you the best profit and the highest return on investment. Look for a property well below the top of your budget, since you’ll likely blow through a lot of money in renovations, especially if any unforeseen issues arise while remodeling the house. That being said, you don’t need to purchase the cheapest property on the market, especially if it’s a dump. While projects are a big part of the renovation process, you don’t want to overwhelm yourself by taking on more than you can realistically handle. Look for a house with good bones–something with a floor plan fairly similar to what you want in your end product. It’s fine if you have to knock a few walls down here and there, so long as they aren’t integral to the support of the home, but you don’t want to have to completely reconfigure the house, re-routing plumbing and electricity. That will get very expensive very fast.
What’s equally as important as the bones of the house is the location. When selecting a location, it’s important to consider the market that you want your home to appeal to. Who do you want to sell this house to? Families or young couples with no children? If you’re looking to sell to young couples, then you might want to look at properties closer to the center of the town you’re buying in, that way they’ll be closer to the town’s amenities like restaurants, bars, and other places of entertainment. If you want to sell to families, then you must do your research on the town to determine the best school districts. You should also look for quiet, low-crime neighborhoods. There are plenty of websites out there that will give you data like crime rates, average property value, and the average income of different neighborhoods in your area.
Operation Renovation
Once you’ve found the perfect property, it’s time to start the renovation process. You mustn’t get ahead of yourself and rush right into knocking walls down. You should have a fully rendered design of your vision so that you can use it as a guide for your choices. If you don’t feel that you possess the necessary amount of creativity needed to make the right design choices for the home you’re flipping, then you might want to consider hiring an interior designer. Not only can interior designers help you realize your vision, but they can use their knowledge of classic and current trends in design to guide you toward choices that will help you sell your home faster.
